Three Essays on Corporate Policy in Workplace Safety and Health
This dissertation includes three chapters on corporate policy in workplace safety and health. The research seeks to understand three economic determinants of workplace safety and health — hedge fund activism, shareholder litigation, and product market competition.Chapter 1 examines the impact of hedge fund activism on employee safety and health. Using a difference-in-differences framework to analyze regulatory safety records data, we find that the workplace incident rate rises after a company is targeted by an activist hedge fund. We also find that target firms reduce workplace safety-related investment, increase worker strain, and reduce management safety emphasis. Overall, the results imply that hedge fund activism induces managerial short-termism with respect to workplace safety. Chapter 2 studies the impact of shareholder litigation risk on workplace safety and health. Using the staggered state adoption of Universal Demand law that lowers shareholder derivative litigation risk to workplace safety, we find that weakened shareholder litigation rights compromise workplace safety. The impact is more pronounced for firms with weak governance, in less competitive, low union coverage, or low skilled industries. Overall, our findings suggest that shareholder litigation incentivizes corporate officials to uphold workplace safety. Chapter 3 examines the impact of product market competition on operational risk management. Using import penetration as exogenous variations for competition with regulatory safety records data, I find that increased import competition reduces workplace incident rate. Import competition also reduces safety violations and right tail risks of severe safety accidents. Overall, these findings suggest an operational channel via which firms manage competition risks.